This week Morning Feature has extended Labor Day into Labor Week with a review of Exiting the Crisis, edited by David Coats and published by the European Trade Union Institute. Thursday we considered the lessons of the 2008 crisis and the Great Recession, as learned (or not) by economists and policy makers. Yesterday we looked at the development model emerging in Latin America, and proposals for more labor-centered policies. Today we conclude with a labor model for a sustainable 21st Century economy.

What is “sustainability?”

Progressive discussions of sustainability often focus on environmental issues, and those are important. But the authors of Exiting the Crisis broaden that concept in important ways. In the chapter’s opening essay, German economist Sigurt Vitols discusses concept of a “sustainable company,” with a focus on corporate governance and escaping the short-term, finance-driven thinking that often ignores the experiences and needs of workers. British Trades Union Congress senior policy advisor Tim Page writes about sustainability through the lens of national industrial policy, and how to avoid a “race to the bottom.” French economist Sébastien Dupuch addresses the importance of public services in achieving fair and sustainable growth. Only after that all groundwork is laid do Anabella Rosemberg and Lora Verheecke of the International Trade Union Confederation and finally Hungarian economist Béla Galgóczi of the European Trade Union Institute move specifically to environmental and “green jobs” issues.

While it frustrated me on first reading, I think the wandering path of that chapter is important if we are to understand and bridge the gap between organized labor and the environmental movement. It’s easy to say “We need to go green,” and it’s true that both the U.S. and other economies must develop a new worldview that recognizes climate change, pollution, and other environmental imperatives.

But consider that a 2008 report by the U.S. Census Bureau (Excel spreadsheet) showed 107,000 Americans working in oil and gas extraction, 205,000 miners (including 82,000 in coal mines), 316,500 working in support activities for those industries, 73,000 in fossil fuel electrical power generation, 85,000 in natural gas distribution, 157,000 in oil and gas pipeline and related construction, and 104,000 in petroleum and coal products manufacturing. That’s already over 1 million “non-green” jobs in the U.S., and I didn’t get to people who build automobiles, trucks, and other fossil fuel-powered vehicles. Galgóczi notes that over 2.5 million Europeans work in automobile manufacturing, and only about 10% of those jobs are arguably “green,” i.e.: manufacturing of fuel-efficient, low-pollution, low-emission vehicles. I also didn’t factor in retail and service businesses who rely on those “non-green” workers.

What are “sustainable jobs?”

Now consider when and where organized labor emerged in the U.S. and, equally important, when organized labor stopped growing. Labor’s growth corresponds with the expansion of “non-green” industries, and labor unions began to shrink just as we began the shift toward an information society. Thus, an American union worker is far more likely to have a “non-green” than a “green” job.

The shift toward an information society also coincided with the rise of precarious work: temporary, part-time, and/or contracted, with little or no job security and often low wages. This trend was worldwide, and has hit women especially hard. Many precarious workers are not hired by their ultimate employers, but instead work for or through contract agencies. In many countries, including the U.S., such employees must negotiate with the contract agency, the ultimate employer, and any existing union at the ultimate employer in order to form or join a union. In practical terms, that makes it all but impossible for precarious workers to organize.

That is the broader context within which organized labor groups consider “sustainability.” That begins at the individual employer-employee level: how sustainable is that job with that company, and Sigurt Vitols argues the key issue there is a transition from the traditional shareholder model of corporate governance. The International Chamber of Commerce offers an excellent nutshell comparison of shareholder and stakeholder models. The key, from a labor perspective, is recognizing that the worker who went to school or apprenticed for a job and has spent several years working with a company may have a greater stakeholder interest in that company than an investor who bought a few hundred shares based on a stock tip. But only the investor gets a vote in corporate governance under the shareholder model.

But over the short term, the different interests and goals of stakeholder-governed firms make it hard to compete with shareholder-governance. Thus Tim Page writes on the need for national policies to encourage more “patient” capital investment. Other authors advocated a financial transactions tax, both to regulate financial markets by discouraging fast-paced speculation and to curb the financial sector’s growing share of the overall economy. That and other policies would make stakeholder-governed firms more competitive and sustainable.

Sébastien Dupuch emphasizes a need for public services. This includes building and maintaining ‘hard’ infrastructure, as well as ‘soft’ infrastructure such as education, health care, and scientific research. These often require economies of scale to be affordable, and Dupuch argues that these should only be privatized when “there is clear evidence that competition would be both genuine and beneficial.”

A new paradigm

Anabella Rosemberg and Lora Verheecke then discuss the new economic paradigm that will be needed to address issues like climate change. They review the arguments in favor of “green growth” – a growth-based economy focused on environmental issues – and note several significant problems in that approach. Price incentives do not always push investors and consumers toward earth-friendly businesses, such shifts are largely limited to developed countries. In the developing world, urgent needs for basic goods and services at the lowest possible prices often trump environmental concerns. Rosemberg and Verheecke also discuss alternatives such as prosperity without growth and greenhouse development rights, which seek to ensure developing economies are not sentenced to perpetual poverty as we address climate change.

We must weigh all of these concerns, Béla Galgóczi concludes, when we talk about a “green transition.” While that transition will create “green jobs,” it will also destroy many “non-green” jobs. As progressives, we must ensure the burden of that transition is not borne entirely by the (often union) workers in those “non-green” jobs. And we must ensure that unions can organize in those “green jobs,” to ensure those become sustainable and not precarious labor.

Environmental progressives who ignore these issues risk alienating labor progressives, and vice versa. To build a more effective progressive coalition – in the U.S. and worldwide – we must avoid wishful thinking and work through the difficult challenges to sustain both workers and the environment. People matter more than profits, and each person matters equally. The earth is our home, not our trash can. And we will need good government to make those happen.

19 Comments

winterbanyan
on September 10, 2011 at 8:40 am

This was a fascinating discussion. When we talk of jobs, we so seldom think about a “stakeholder” economy, which is what makes jobs sustainable, unlike a “shareholder” economy which has proved time and again that it likes layoffs as they improve the bottom line temporarily.

If we want to transition to a “green economy,” it’s clear to me now as never before that we also have to transition to “sustainable” jobs in terms of the stakeholders, the people who actually work those jobs, and we need to make it possible to unionize them.

As a recent speaker from the IBEW said, “We try to give back to our communities through these programs because we’re well aware that union workers make 30% more than non-union workers.”

That’s an amazing number, and the loss of unions over the years explains a lot about how our current economy works: lower pay, worse hours, and frequent layoffs.

We need to fight for unions, and they need to fight for us. They will, too. They have in the past. But they’re less likely to if we keep allowing them to get whittled away, or make it harder to unionize.

NCrissieB
on September 10, 2011 at 9:38 am

Unions and other workers’ organizations – such as cooperatives for precarious and self-employed workers who can’t form traditional unions – are essential for making the transition to a sustainable economy. Individuals lack the resources to bear that burden, and the organizational clout to get a seat at policy tables. We’ll need that clout to build wider support for stakeholder corporate governance.

Several authors in Exiting the Crisis discuss the Great Recession as evidence for the failure of the shareholder model, but I saved that for today because it’s especially important in addressing climate change and other environmental issues. A corporation focused on “shareholder value” will rarely have sufficient pressure to internalize environmental costs, or to help its workers transition into “green jobs” that may require extensive retraining.

This is an interconnected puzzle, and no one piece will solve it.

Good morning! ::hugggggs::

addisnana
on September 10, 2011 at 8:52 am

One of the things that strikes me is that shareholders and executives operate on a different time frame than workers.

Publicly held corporations report their earnings quarterly. The pressure to post good results every 3 months leads to short term decisions that maximize profits and that often fly in the face of a longer term strategic plan.

Workers don’t think of having a job for a quarter. Most of us will work a good share of our adult lives and probably have more than one career. The pace of change dictates that workers will need to be retained as changes come. Is that the responsibility of the workers, their employers or the governments?

I am not a runner but perhaps this analogy will work. Corporations are sprinters. They have developed those muscles for short bursts of speed. Workers are marathoners. They have to have endurance.

I do think that part of the answer is to reconcile the different time horizons. Personally I would eliminate the quarterly EPS stuff and move corporations to more long term thinking.

winterbanyan
on September 10, 2011 at 8:58 am

That time frame idea is excellent, addisnana. In all honesty, I hadn’t exactly thought of it in those terms, but you’re right. Workers are willing to dedicate for the long term. They want the long term.

Publicly held corporations on the other hand are always thinking about the next shareholder report, so their horizon is only three months long. That can’t possibly make for decisions that are good in the long term. No way. Now if we could just wake shareholders to the importance of long-range planning. Maybe getting rid of the quarterly report would do that.

Great comment!

glendaw271
on September 10, 2011 at 9:36 am

Excellent point about the time frames. The thing is, I can remember studying business in the mid-70s, before the advent of all things MBA and the Reagan era.

At that time, the business courses didn’t just talk about quarterly issues, but included several different time frames and there were discussions about the importance of all of them. At that time, it was assumed that a particular business had as one of its core principals a desire to remain in business indefinitely.

Because of that, time frames of more than five years were considered important, and things like the business reputation, business good will and keeping a strong workforce were important items and were considered part of the assets that a business had and were given a dollar value. It was part of the Generally Accepted Accounting Principals of that time.

Now, after thirty years of the new business school of thought, those things are considered quaint and unimportant. Thus, keeping a worker throughout his working life is no longer something that is important for a business.

addisnana
on September 10, 2011 at 10:14 am

I remember a model by Judy Bell-White that explained that corporations needed to meet the three E’s: Effective, Enduring and Ethical. Two of the three was not good enough. It does seem quaint and “so 20th century” as day traders can make or lose millions in an hour. I am older but somehow I think we are moving too fast to have any idea what is really going on. Remember the day the market went down 1,000 points because someone’s finger was too fat and he accidentally made a wrong entry.

NCrissieB
on September 10, 2011 at 10:23 am

This is another issue I’d hoped to address and couldn’t squeeze in, Glenda:

Thus, keeping a worker throughout his working life is no longer something that is important for a business.

Several authors discuss the social cohesion lost when labor becomes merely a commodity. Some workers will inevitably want – and must be free – to change jobs or even career fields. But there’s a big difference between changing jobs or careers by choice and living in a society where few if any jobs offer real security. Workers who feel secure are more likely to form community bonds than those who wonder if they’ll have to move (again) in a year or three. Those community bonds foster a wide range of social progress: citizens working together for better local infrastructure, deter crime, etc. Medical studies also show that people with strong community bonds tend to be healthier and happier.

Like Jan, I’d never heard the term “precarious labor” before. But it’s a wonderfully descriptive term … at many levels.

Good morning! ::hugggggs::

NCrissieB
on September 10, 2011 at 9:49 am

This is an important and non-intuitive point, addisnana:

Shareholders and executives operate on a different time frame than workers.

While corporations can live forever, the shareholder model tends toward decisions based on short-term profits. And while workers are mortal and often think of themselves as getting by paycheck-to-paycheck, in fact they have experiences and needs that stretch beyond quarterly reports … as do the concerns of community leaders and environmental scientists.

The stakeholder model helps to reconcile those time horizons. It requires a broader “dashboard” of corporate indicators than quarterly P&L reports, and all stakeholders’ recognition that there will sometimes be tradeoffs among those indicators. Sigmund Vitols writes about that in his essay, but I didn’t have space to wade into those details here.

The term “precarious workers” is new to me. I can see it clearly (I am one) and many of us do not know how close to the edge of the cliff we are (we won’t know until we fall).

I have been a contract worker for 31 years and many times during that period I was not sure where the next job would come from. Then something showed up or I switched directions or I accepted something less than what I wanted.

The other thing about “precarious workers” is that we are essentially on our own. I am not sure how we achieve solidarity when we have different “employers” and different terms with those employers. If we go out on “strike,” we are replaced. If we complain, we are replaced.

Our solidarity, then, needs to come from our membership in something other than our work status. We need a solidarity of resolve or purpose, not one the leads to job actions, but one that leads to us working together to get the good government we need to survive.

Can a political party help create a solidarity of those of us not bound by any other connections? If it doesn’t, maybe it should.

winterbanyan
on September 10, 2011 at 9:17 am

Great points, Jan. I, too, am a contract worker and have been for over 20 years. It’s a scary way to live. No “guild” or organization I belong to has the will or ability to call a general strike, so we are indeed all alone doing the best we can. And each time we try to band together, we generally find ourselves in a lot of trouble before we achieve much.

Some of us are going through just such a period right now over contract issues. And to protect themselves, they need to hire a lawyer to be their anonymous face. Think of that.

One of my guilds occasionally puts its attorneys to work for us, but it’s really hard to get legal help once a contract has been signed. Even when the company with whom we are contracted changes the terms, because once you fight that, you can rest assured there will never be another contract. I’ve seen careers go down the tubes over this.

So how do we deal with this? I don’t know. I don’t know if our political party can be our point of solidarity, but I see nowhere else.

addisnana
on September 10, 2011 at 9:18 am

Too many things in the US are tied to employment. Health care benefits and a sense of job security come to mind. Both of those, in my opinion are human rights issues and tying them to employment leaves independent contractors and the unemployed at a huge disadvantage.

Can a political party help create a solidarity of those of us not bound by any other connections? If it doesn’t, maybe it should.

A very good question.

NCrissieB
on September 10, 2011 at 10:07 am

Several of the authors discuss the challenges of precarious workers, who are as you say “on our own.” They propose workers’ cooperatives as one option for those who cannot organize a traditional union. While most are built within or come together to form a single enterprise, others are formed more like guilds to support workers in specific fields. The U.S. Federation of Workers’ Cooperatives has an information page including the USFWC’s values and principles.

That said, as winterbanyan noted, guilds can’t completely relieve the precarious nature of their members’ employment. Some of those issues can be addressed politically, broadening the base of public services on which all workers can rely. To make that happen more broadly, we can and must also build worker solidarity within the Democratic Party.

The problem with guilds is three-fold: 1) there are so many differences in how most contract IT workers jobs are structured, by the time a good match was found you might be in a group of 3 or 4 people (back to no clout); 2) who has time to devote to membership in a guild when time is, quite literally, money?; and 3) nothing is free. Many precarious workers are cutting back on costs, not adding costs. I dropped three very expensive technical subscriptions in the last year to cut costs.

It would be better if we could find an existing organization that we already have an interest in (electing more and better Democrats) and put our efforts there. The costs can be managed and the time budgeted.

NCrissieB
on September 10, 2011 at 11:01 am

Swedish economist Thomas Carlén attributes the success of the Nordic Model to seven pillars, and organized labor is central to three of those pillars. In the Nordic countries – Sweden, Denmark, Norway, Finland and Iceland – up to 70% of workers are organized. (Organized labor is less dense in Norway, at ‘only’ 50%.) That means at least 30% of Nordic workers are not organized, and not all jobs fit neatly into union, guild, or cooperative organizations. But Nordic workers who are not organized still benefit from the voice of organized labor in setting public policy.

Your job may be one of those 30%, but Carlén and the other authors of Exiting the Crisis present a compelling case that organizing the other 70% would profoundly change the political dialogue in the U.S. Paul Pierson and Jacob Hacker made a similar case in Winner Take All Politics, as we discussed back in June. The Democratic Party can and must be a voice for workers, but it needs the support of other organizations as well.

Good morning! ::hugggggs::

addisnana
on September 10, 2011 at 10:52 am

I forgot my manners. You deserve a big THANK YOU for this series! I am still reading the book slowly and carefully. It is chock full of good stuff. You did an admirable job making it digestible.

NCrissieB
on September 10, 2011 at 11:09 am

You’re welcome, addisnana. I’m not sure how much of this was me making it digestible and us digesting it together. The book is dense reading, in part because most of the essays are written by economists. They mostly avoid econ-speak, but they couldn’t avoid it entirely. And as we saw today, this is a very complex topic with lots of interrelated pieces.

Each author writes in depth about one or two of those pieces, and editor David Coats tries to bridge them with introductory and/or concluding remarks in each section. But I wish I’d had time to reread the book at least once before reviewing it here.

Good morning! ::hugggggs::

Churchlady
on September 10, 2011 at 1:56 pm

Beyond unionization we have to look at the real “shareholder” basis of sustainability and that is employee ownership and management, partial or total. Taft-Hartley forbids employees from having any say over company policies. The sole base for engagement is ownership. Where companies are owned and managed by workers in them, they flourish. There is absolutely no difference between an individual’s motive to be sole owner and many people’s motives to be cooperative owners – you have skin in the game. The old saw that management’s brains lie under the workman’s (sic) cap is absolutely accurate. The people who work know what can and should be done. Where ownership is total, the people make radically different calculations about sustainability. They can and do choose sacrifice of individual returns to keep plants and businesses alive. Absentee stockholders NEVER do that – it’s entirely about short-term monetary gain. Communities and employees have a vested interest in preserving the firm as a going concern. That is a huge benefit to all. The over 11,000 worker owned and especially managed companies are THE most profitable in the nation. Time to look at the ‘third way’. Unions will always be important even within these operations. They protect the individuals. But we have to find some way to remove short term mentality of unproductive stockholders to renew dedication to production. As we “green” America we also need to green basic industry, and that is entirely doable. Canada did it with their Nanticoke steel plant. We can do the same. Basic capital and durable consumer goods production is essential to our economic strength. Back to basics – new forms of ownership and management go hand in hand to create sustainable economics.

winterbanyan
on September 10, 2011 at 3:21 pm

Welcome to BPI, Churchlady. Sorry my welcome to you is so delayed, but I’ve been out, as I’m sure many people are on a pleasant Saturday.

Your comment was thought provoking, and I agree with you about stakeholder held corporations. They seem to do very well compared to others.

I hope we’ll see more of you. And again, Welcome. 🙂

NCrissieB
on September 10, 2011 at 4:38 pm

Welcome to BPI, Churchlady. I agree that employee-owned businesses offer some advantages over absentee stockholders. They also have disadvantages, such as difficulty raising additional capital if employee-owners are maxed out. And while I agree that employees are have a stake in how a business is run, they are not the only stakeholders left out in the shareholder model.

Some U.S. business schools are already teaching and some U.S. businesses already practice stakeholder governance in a limited form, but more a wider and more complete move would require changes in corporations law. The owners of a business – whether investors or employees – will never be the only people who have a stake in how that business is run and whether it remains a going concern. University of Victoria professor Ronald Mitchell and two colleagues offered one stakeholder map, and other researchers offer other stakeholder maps.

While some of those stakes are too remote or the stakeholders too diffuse to model well in corporate governance, others could and should have a voice in corporate decisions. But as Tim Page wrote in Exiting the Crisis, a wider range of stakeholder interests involves tradeoffs that may require more “patient” capital. Stakeholder-governed firms can be profitable, but they will not always be as profitable as firms governed solely by and for shareholders.